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P&G and palm oil: A different view

CIN
10:46 p.m. EDT April 11, 2014

A worker loads oil palm fruit into a truck at a plantation in Sayaxche, Guatemala. Thompson Ayodele says P&G’s decision to adopt a new set of environmental policies for palm oil will hurt small farmers in developing countries.
(Photo:
AP
)

Thompson Ayodele is the director of the Initiative for Public Policy Analysis, an public policy think tank based in Lagos, Nigeria.

Procter & Gamble’s recent decision to adopt a new set of environmental policies has forced it to choose between well-heeled activists and small farmers in developing countries.

P&G was subjected to a nasty campaign by Greenpeace on palm oil that attacked its key brands and even its headquarters. The company eventually gave in.

Greenpeace called this a victory. Let’s examine that “victory.”

P&G has said it will, among other things, ensure the palm oil it purchases for detergents and cosmetics will be traceable and deforestation-free.

These are questionable goals. Neither Greenpeace nor P&G has mentioned the real losers from their new green deal: more than 3.5 million small farmers around the world that grow and sell palm oil.

P&G – like its main rivals such as Unilever – has committed to various sustainable sourcing initiatives over the past decade. It joined the Roundtable on Sustainable Palm Oil (RSPO), a green initiative to promote Western-approved palm oil, and recently undertook a palm oil pledge from the Forest Trust, a Swiss environmental group.

These organizations have their flaws, and neither is committed to incorporating genuine support for small farmers into their mission.

According to Greenpeace, RSPO does not go far enough. Over the past two years, Greenpeace has steadily been picking off the world’s largest growers, processors and purchasers of palm oil, demanding that they cede to a new set of purely environmental demands. P&G was the latest target.

The world’s largest growers can afford to pay for these new commitments. The world’s small farmers cannot, particularly in countries like Nigeria, where most of the country’s palm oil is produced by small holders.

Unilever, which adopted similar policies last year, estimates it will need to cut off 80 percent of the small-holder farmers from its supply chain to meet the same traceability requirements.

The world’s largest consumer-goods companies will now not buy from these small farmers – not because they are doing environmental damage, but simply because they cannot afford the traceability systems demanded by Green NGOs. This will make it more difficult for palm oil produced by small farmers to enter the market, undermining much social and economic progress in countries like Nigeria.

In 2011, P&G and Unilever were fined more than 315 million euros (more than $430 million) for cartel pricing arrangements for washing powder. This cartel started as an environmental initiative.

It is possible, therefore, that consumers may end up paying more for soap and shampoo. But the real economic losers are the farmers.

For Nigerian small-holder farmers, palm oil is nothing less than an economic miracle. Half of Nigeria’s population lives on less than $2 per day. Palm oil farmers earn roughly five times this.

This story is repeated throughout Malaysia and Indonesia, where smallholder palm-oil farmers are in the millions. Per hectare yields for small farmers there are more than 10 times other crops. According to one study, palm oil has practically doubled the incomes of Indonesian farmers over the past decade.

Here is the trade-off: On the one side, there is a group of wealthy Western activists with a slick marketing team and a catchy “no deforestation” slogan. On the other, there is a relatively small group of poor farmers in distant parts of the world that have had their lives improved by palm oil.

P&G sided with the activists. It didn’t even call the farmers. P&G’s new policy does nothing to ensure social and economic dividends: It is focusing only on appeasing Greenpeace and the Forest Trust.

This isn’t sustainable development. This is Western environmentalism gone mad. ⬛